National and Historical Variations in Innovation Performance

Innovation performance differs across nations. Within the same nation, innovation performance also varies across time. In the first part of this chapter, we discuss some cultural, political, and institutional factors that explain historical variations in a country’s innovation performance. In the second part of this chapter, using the multinational data from the Global Innovation Index (GII), we focus on the extent to which people in a country rely on financial institutions to mitigate risks in daily life as a proximal predictor of innovation performance at the national level. We argue that the tendency to rely on formal institutions to mitigate risks in everyday life reflects the level of institutional trust, which is a factor that contributes to both cross-national and historical variations in innovation performance. We further argue that institutional trust plays a particularly important role in promoting innovation in countries that lack strong institutional support for innovation.